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Can I deduct travel expenses?
If you’re self-employed or own a business , you can deduct work-related travel expenses, including vehicles, airfare, lodging, and meals. The expenses must be ordinary and necessary.
For vehicle expenses, you can choose between the standard mileage rate or the actual cost method where you track what you paid for gas and maintenance.
You can generally only claim 50% of the cost of your meals while on business-related travel away from your tax home, provided your trip requires an overnight stay. You can also deduct 50% of the cost of meals for entertaining clients (regardless of location), but due to the Tax Cuts and Jobs Act of 2017 (TCJA), you can no longer deduct entertainment expenses in tax years 2018 through 2025. In 2021 and 2022, the law allows a deduction for 100% of your cost of food and beverages that are provided by a restaurant, instead of the usual 50% deduction.
On the other hand, employees can no longer deduct out-of-pocket travel costs in tax years 2018 through 2025 per the TCJA. Prior to the tax rule change, employees could claim 50% of the cost of unreimbursed meals while on business-related travel away from their tax home if the trip required an overnight stay, as well as other unreimbursed job-related travel costs. These expenses were handled as a 2% miscellaneous itemized deduction.
- Can I deduct medical mileage and travel?
- Can I deduct my moving expenses?
- Can I deduct rent?
- Can I deduct mileage?
- Can employees deduct commuting expenses like gas, mileage, fares, and tolls?
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- Building Your Business
- Business Taxes
7 Rules You Should Know About Deducting Business Travel Expenses
- What Is Your "Tax Home"?
Charges on Your Hotel Bill
The 50% rule for meals, the cost of bringing a spouse, friend or employee.
- Using Per Diems To Calculate Employee Travel Costs
Combined Business/Personal Trips
International business travel.
- The Cost of a Cruise (Within Limits)
Frequently Asked Questions (FAQs)
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The IRS has a specific definition for business travel when it comes to determining whether these expenses are tax deductible. The agency says business travel is travel that takes you away from your tax home and is "substantially longer than an ordinary day's work." It requires that you sleep or rest while you're away from home, and that you do so. The travel must be "temporary." This means it can't last a year or more.
- You can deduct expenses that take you away from your tax home for a period of time that would require you to spend the night.
- Your tax home is the city or area where your regular place of business is located.
- You’re limited to 50% of the cost of your meals.
- Your trip must be entirely business-related for costs to be deductible, but special rules apply if you travel outside the U.S.
What Is Your "Tax Home"?
Your tax home is a concept set by the IRS to help determine whether a trip is tax deductible. It's defined by the IRS as the entire city or general area where your regular place of business is located. It's not necessarily the area where you live.
Your tax home can be used to determine whether your business travel expenses are deductible after you've determined where it's located. You can probably count your expenses during travel as business deductions if you have to leave your tax home overnight or if you otherwise need time to rest and sleep while you're away.
Check with a tax professional to make sure you're accurately identifying the location of your tax home.
Charges for your room and associated tax are deductible, as are laundry expenses and charges for phone calls or for use of a fax machine. Tips are deductible as well. But additional personal charges, such as gym fees or fees for movies or games aren't deductible.
You can deduct the cost of meals while you're traveling, but entertainment expenses are no longer deductible and you can't deduct "lavish or extravagant" meals.
Meal costs are deductible at 50%. The 50% limit also applies to taxes and tips. You can use either your actual costs or a standard meal allowance to take a meal cost deduction, as long as it doesn't exceed the 50% limit.
The cost of bringing a spouse, child, or anyone else along on a business trip is considered a personal expense and isn't deductible. But you may be able to deduct travel expenses for the individual if:
- The person is an employee
- They have a bona fide business purpose for traveling with you
- They would otherwise be allowed to deduct travel expenses
You may be able to deduct the cost of a companion's travel if you can prove that the other person is employed by the business and is performing substantial business-related tasks while on the trip. This may include taking minutes at meetings or meeting with business clients.
Using Per Diems To Calculate Employee Travel Costs
The term "per diem" means "per day." Per diems are amounts that are considered reasonable for daily meals and miscellaneous expenses while traveling.
Per diem rates are set for U.S. and overseas travel, and the rates differ depending on the area. They're higher in larger U.S. cities than for sections of the country outside larger metropolitan areas. Companies can set their own per diem rates, but most businesses use the rates set by the U.S. government.
Per diem reimbursements aren't taxable unless they're greater than the maximum rate set by the General Service Administration. The excess is taxable to the employee.
If you don't spend all your time on business activities during an international trip, you can only deduct the business portion of getting to and from the destination. You must allocate costs between business and personal activities.
Your trip must be entirely business-related for you to take deductions for travel costs if you remain in the U.S., but some "incidental" personal time is okay. It would be incidental to the main purpose of your trip if you travel to Dallas for business and you spend an evening with family in the area while you're there.
But attempting to turn a personal trip into a business trip won't work unless the trip is substantially for business purposes. The IRS indicates that “the scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, will not change what is really a vacation into a business trip."
The rules are different if part or all of your trip takes you outside the U.S. Your international travel may be considered business-related if you were outside the U.S. for more than a week and less than 25% of the time was spent on personal activities.
You can deduct the costs of your entire trip if it takes you outside the U.S. and you spend the entire time on business activities, but you must have "substantial control" over the itinerary. An employee traveling with you wouldn't have control over the trip, but you would as the business owner would.
The trip may be considered entirely for business if you spend less than 25% of the time on personal activities if your trip takes you outside the U.S. for more than a week.
You can only deduct the business portion of getting to and from the destination if you don't spend all your time on business activities during an international trip. You must allocate costs between your business and personal activities.
The Cost of a Cruise (Within Limits)
The cost of a cruise may be deductible up to the specified limit determined by the IRS, which is $2,000 per year as of 2022. You must be able to show that the cruise was directly related to a business event, such as a business meeting or board of directors meeting.
The IRS imposes specific additional strict requirements for deducting cruise travel as a business expense.
How do you write off business travel expenses?
Business travel expenses are entered on Schedule C if you're self-employed . The schedule is filed along with your Form 1040 tax return. It lists all your business income, then you can subtract the cost of your business travel and other business deductions you qualify for to arrive at your taxable income.
What are standard business travel expenses?
Standard business travel expenses include lodging, food, transportation costs , shipping of baggage and/or work items, laundry and dry cleaning, communication costs, and tips. But numerous rules apply so check with a tax professional before you claim them.
The Bottom Line
These tax deduction regulations are complicated, and there are many qualifications and exceptions. Consult with your tax and legal professionals before taking actions that could affect your business.
IRS. " Topic No. 511: Business Travel Expenses ."
IRS. " Publication 463 (2021), Travel, Gift, and Car Expenses ."
IRS. " Here’s What Taxpayers Need To Know About Business-Related Travel Deductions ."
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Everything You Need to Know About the Business Travel Tax Deduction
Justin is an IRS Enrolled Agent, allowing him to represent taxpayers before the IRS. He loves helping freelancers and small business owners save on taxes. He is also an attorney and works part-time with the Keeper Tax team.
You don’t have to fly first class and stay at a fancy hotel to claim travel expense tax deductions. Conferences, worksite visits, and even a change of scenery can (sometimes) qualify as business travel.
What counts as business travel?
The IRS does have a few simple guidelines for determining what counts as business travel. Your trip has to be:
- Mostly business
- An “ordinary and necessary” expense
- Someplace far away from your “tax home”
What counts as "mostly business"?
The IRS will measure your time away in days. If you spend more days doing business activities than not, your trip is considered "mostly business". Your travel days are counted as work days.
Special rules for traveling abroad
If you are traveling abroad for business purposes, you trip counts as " entirely for business " as long as you spend less than 25% of your time on personal activities (like vacationing). Your travel days count as work days.
So say you you head off to Zurich for nine days. You've got a seven-day run of conference talks, client meetings, and the travel it takes to get you there. You then tack on two days skiing on the nearby slopes.
Good news: Your trip still counts as "entirely for business." That's because two out of nine days is less than 25%.
What is an “ordinary and necessary” expense?
“Ordinary and necessary” means that the trip:
- Makes sense given your industry, and
- Was taken for the purpose of carrying out business activities
If you have a choice between two conferences — one in your hometown, and one in London — the British one wouldn’t be an ordinary and necessary expense.
What is your tax home?
A taxpayer can deduct travel expenses anytime you are traveling away from home but depending on where you work the IRS definition of “home” can get complicated.
Your tax home is often — but not always — where you live with your family (what the IRS calls your "family home"). When it comes to defining it, there are two factors to consider:
- What's your main place of business, and
- How large is your tax home
What's your main place of business?
If your main place of business is somewhere other than your family home, your tax home will be the former — where you work, not where your family lives.
For example, say you:
- Live with your family in Chicago, but
- Work in Milwaukee during the week (where you stay in hotels and eat in restaurants)
Then your tax home is Milwaukee. That's your main place of business, even if you travel back to your family home every weekend.
How large is your tax home?
In most cases, your tax home is the entire city or general area where your main place of business is located.
The “entire city” is easy to define but “general area” gets a bit tricker. For example, if you live in a rural area, then your general area may span several counties during a regular work week.
Rules for business travel
Want to check if your trip is tax-deductible? Make sure it follows these rules set by the IRS.
1. Your trip should take you away from your home base
A good rule of thumb is 100 miles. That’s about a two hour drive, or any kind of plane ride. To be able to claim all the possible travel deductions, your trip should require you to sleep somewhere that isn’t your home.
2. You should be working regular hours
In general, that means eight hours a day of work-related activity.
It’s fine to take personal time in the evenings, and you can still take weekends off. But you can’t take a half-hour call from Disneyland and call it a business trip.
Here's an example. Let’s say you’re a real estate agent living in Chicago. You travel to an industry conference in Las Vegas. You go to the conference during the day, go out in the evenings, and then stay the weekend. That’s a business trip!
3. The trip should last less than a year
Once you’ve been somewhere for over a year, you’re essentially living there. However, traveling for six months at a time is fine!
For example, say you’re a freelancer on Upwork, living in Seattle. You go down to stay with your sister in San Diego for the winter to expand your client network, and you work regular hours while you’re there. That counts as business travel.
What about digital nomads?
With the rise of remote-first workplaces, many freelancers choose to take their work with them as they travel the globe. There are a couple of requirements these expats have to meet if they want to write off travel costs.
Requirement #1: A tax home
Digital nomads have to be able to claim a particular foreign city as a tax home if they want to write off any travel expenses. You don't have to be there all the time — but it should be your professional home base when you're abroad.
For example, say you've rent a room or a studio apartment in Prague for the year. You regularly call clients and finish projects from there. You still travel a lot, for both work and play. But Prague is your tax home, so you can write off travel expenses.
Requirement #2: Some work-related reason for traveling
As long as you've got a tax home and some work-related reason for traveling, these excursion count as business trips. Plausible reasons include meeting with local clients, or attending a local conference and then extending your stay.
However, if you’re a freelance software developer working from Thailand because you like the weather, that unfortunately doesn't count as business travel.
The travel expenses you can write off
As a rule of thumb, all travel-related expenses on a business trip are tax-deductible. You can also claim meals while traveling, but be careful with entertainment expenses (like going out for drinks!).
Here are some common travel-related write-offs you can take.
🛫 All transportation
Any transportation costs are a travel tax deduction. This includes traveling by airplane, train, bus, or car. Baggage fees are deductible, and so are Uber rides to and from the airport.
Just remember: if a client is comping your airfare, or if you booked your ticket with frequent flier miles, then it isn't deductible since your cost was $0.
If you rent a car to go on a business trip, that rental is tax-deductible. If you drive your own vehicle, you can either take actual costs or use the standard mileage deduction. There's more info on that in our guide to deducting car expenses .
Hotels, motels, Airbnb stays, sublets on Craigslist, even reimbursing a friend for crashing on their couch: all of these are tax-deductible lodging expenses.
🥡 Meals while traveling
If your trip has you staying overnight — or even crashing somewhere for a few hours before you can head back — you can write off food expenses. Grabbing a burger alone or a coffee at your airport terminal counts! Even groceries and takeout are tax-deductible.
One important thing to keep in mind: You can usually deduct 50% of your meal costs. For 2021 and 2022, meals you get at restaurants are 100% tax-deductible. Go to the grocery store, though, and you’re limited to the usual 50%.
🌐 Wi-Fi and communications
Wi-Fi — on a plane or at your hotel — is completely deductible when you’re traveling for work. This also goes for other communication expenses, like hotspots and international calls.
If you need to ship things as part of your trip — think conference booth materials or extra clothes — those expenses are also tax-deductible.
👔 Dry cleaning
Need to look your best on the trip? You can write off related expenses, like laundry charges.
Travel expenses you can't deduct
Some travel costs may seem like no-brainers, but they're not actually tax-deductible. Here are a couple of common ones to watch our for.
The cost of bringing your child or spouse
If you bring your child or spouse on a business trip, your travel expense deductions get a little trickier. In general, the cost of bring other people on a business trip is considered personal expense — which means it's not deductible.
You can only deduct travel expenses if your child or spouse:
- Is an employee,
- Has a bona fide business purpose for traveling with you, and
- Would otherwise be allowed to deduct the travel expense on their own
Some hotel bill charges
Staying in a hotel may be required for travel purposes. That's why the room charge and taxes are deductible.
Some additional charges, though, won't qualify. Here are some examples of fees that aren't tax-deductible:
- Gym or fitness center fees
- Movie rental fees
- Game rental fees
Where to claim travel expenses when filing your taxes
If you are self-employed, you will claim all your income tax deduction on the Schedule C. This is part of the Form 1040 that self-employed people complete ever year.
What happens if your business deductions are disallowed?
If the IRS challenges your business deduction and they are disallowed, there are potential penalties. This can happen if:
- The deduction was not legitimate and shouldn't have been claimed in the first place, or
- The deduction was legitimate, but you don't have the documentation to support it
When does the penalty come into play?
The 20% penalty is not automatic. It only applies if it allowed you to pay substantially less taxes than you normally would. In most cases, the IRS considers “substantially less” to mean you paid at least 10% less.
In practice, you would only reach this 10% threshold if the IRS disqualified a significant number of your travel deductions.
How much is the penalty?
The penalty is normally 20% of the difference between what you should have paid and what you actually paid. You also have to make up the original difference.
In total, this means you will be paying 120% of your original tax obligation: your original obligation, plus 20% penalty.
Justin W. Jones, EA, JD
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How to find deductions for travel expenses
updated October 27, 2023 · 15min read
What is business travel or a business trip, what is a business-related travel expense, what business travel expenses are tax deductible, are there other tax deductions for travel expenses, tracking expenses on your business trip, importance of documentation, combining business and personal travel, special considerations for self-employed individuals, getting help with tax deductions for travel expenses, frequently asked questions.
Business travel is back after the pandemic, and with that increase comes the age-old question every business traveler must ask at least once: "What can I deduct as a business expense while I'm on the road?"
You've likely heard the term "write-off" somewhere and may have used it somewhere within your business circles. But what exactly is it? You might wonder if you can book first-class travel or five-star lodging and eat in fancy dining establishments and then submit them as business write-offs. The short, overarching rule for those specifics is no, you probably cannot, but there is more to eligible business travel expenses than that.
So before you book travel arrangements on your credit card (hopefully a designated business credit card), read on for more information about making expensing your business travel less stressful.
- Understand IRS guidelines for deductible travel expenses to maximize tax savings.
- Proper documentation is essential for claiming deductions, including meals and entertainment, with a clear business justification.
- Utilize tax professionals and leverage technology to ensure accurate deductions, compliance with laws, and maximum savings on travel expense deductions.
Simply put, business travel or a business trip is defined as any travel conducted that is business-related. To be considered eligible as a business trip, the travel itself must meet the following criteria:
- The trip must be conducted for legitimate business purposes, not as leisure time, vacation, or personal purposes.
- The trip must occur outside the bounds of a regular commute to and from work (or the main place of business) and home.
If the trip meets these criteria, it falls under the category of a business trip. It also means that you can deduct travel expenses whether you are a business owner sending an employee on your behalf or a self-employed individual.
To better understand business-related travel expenses, it's a good idea to look at overall business expenses. A business expense is incurred as part of the regular day-to-day operations of your employer (or for you if you are a self-employed individual) to conduct the business. Under current Internal Revenue Service (IRS) laws, special rules allow portions of business expenses to be deducted from the overall business income. These expenses are considered tax deductible, which means they are applied before any taxes are. The umbrella term "write-off" comes from this business tax deduction category.
In business, eligible tax deductions can have a significant impact. Being able to deduct expenses can often reduce the total overall taxable income . Cumulatively, tax-deductible expenses will likely reduce the total bill when it is time to file your tax return.
A deductible business travel expense is one that you or an employee incur during travel directly related to conducting business. In both instances (a business expense or a business travel expense), it is essential to ensure the expense falls under the category of being for bona fide business purposes. This means that deducting the travel expenses must be something genuinely related to conducting or doing a bona fide business purpose. If it is, its cost can be written off as part of business or business travel-related expenses. It applies to self-employed individuals or employees traveling for an employer or business owner.
So what exactly can you expense?
First and foremost, consider the basics, or the "Big 3" in business travel. Essentials here include these three actual expenses: costs related to how you will get to your destination (travel), where you will stay (lodging), and what you will eat and drink when you are there and in transit. Each category within the Big Three can be an eligible travel expense and, therefore, a tax write-off, but they come with some criteria worth exploring.
Transportation expenses: If you plan to travel by car, and you will either use a vehicle you lease long-term or your car, there are two choices related to how this mode of transportation might be expensed. One choice is known as the “ standard mileage rate ." Under current IRS allowances, the standard mileage rate deduction for self-employed individuals and employees is 65.5 cents per mile for business-related travel. The rate per mile would apply to any driving conducted to or from the business destination. It would also apply to any driving conducted while you are at the destination if it is business-related. For instance, once at the destination, if driving must be done to run errands, those miles can be added to the total mileage count.
The other vehicle expense option for a business trip is to itemize the individual expenses. Eligible business costs, in this instance, include the lease, insurance, fuel, costs related to the upkeep and maintenance of the vehicle, such as oil changes or tune-ups, and any major repairs on the vehicle, such as fixing a flat tire.
If you are renting a car as part of your transportation expenses and it falls under the ordinary and necessary business travel expense category, the cost to rent a car would qualify as an eligible business expense. Other vehicle-related expenses that qualify for travel deductions include tolls and parking fees.
Actual expenses method
The actual expenses method involves calculating the total cost of vehicle use and multiplying it by the percentage used for business purposes. This includes:
- Garage rent
- Vehicle registration fees
- Lease payments
To calculate the percentage of business use, divide the total business miles driven by the total miles driven in the year. While this method can lead to larger deductions, it requires detailed record-keeping and more complex calculations than the standard mileage method.
Standard mileage rate
The standard mileage rate allows you to claim a fixed rate per mile driven for business purposes, plus parking fees and tolls. The standard mileage rate for business in the United States is 65.5 cents per mile. The IRS determines This rate annually based on a study of the fixed and variable costs of operating a vehicle for business reasons, such as gas, maintenance, and depreciation.
This method can be used for self-employment, business-related travel, or when using a vehicle for work as an independent contractor. However, personal use of the vehicle is not eligible for this deduction.
Ticketed travel: For ticketed travel, like flights or trips by train, the cost of your ticket can be expensed as a travel deduction if your class fare qualifies as an eligible and reasonable expense. This means that while you likely won't be able to deduct first-class fare, you can deduct what is known as the ordinary and necessary expense related to the fare, which covers classes such as economy. You can also expense costs incurred while en route, such as baggage fees. And, if you are waiting at an airport or train station, any meal costs, snacks, or drinks would also qualify as business-related expenses.
Meal expenses and entertainment: Business meals cut eligible business expenses but with some stipulations, including the standard meal allowance. While current IRS laws permit for up to 50% of a business meal to be deducted, like ticketed travel, rental cars, and other business-travel-related costs, the meal must fall under an ordinary and necessary expense to be eligible as a tax-deductible business expense. If you are tempted to go all out and splurge on your dining, you might find that it is not an eligible business travel expense.
But changes have been made to the entertainment category. While entertainment used to be an allowed business expense, it is sometimes no longer eligible to claim tax deductions. This means that if you expect to take clients out as part of client meetings or conduct business, be sure to read the fine print since you might discover you cannot claim entertainment as a legitimate business expense.
Lodging expenses: Business travelers must consider where they will sleep while away. To be considered eligible as a business expense, the location of your stay must be outside of the main place of business and require overnight accommodation. Notably, in this expense category, IRS rules stipulate that for it to be an eligible business expense, the lodging cannot fall into the extravagant or considered recreational category.
Remember: With each of the "Big 3" and all other related business expenses to be deducted, the expenses must be ordinary and fall under the category of reasonable business expenses. If you opt for pricey vehicles, tickets, meals, and rooms instead of the available moderately-priced alternatives, you risk losing eligibility as legitimate business expenses.
There are some other expenses anyone traveling for business should consider submitting as tax-deductible expenses.
Event fees: These could come into play if you travel to an event such as a conference, convention, or trade show. In addition to the Big 3, certain expenses related to attending these events would qualify as eligible business travel expenses. The expenses are deductible if the event has an entry or booth fee. While you are there, if you attend workshops, lectures, or courses that require materials such as a workbook or registration, these would also be eligible as tax-deductible travel expenses. And, if you are running a booth or table at an event and need materials or supplies, the cost to purchase them would also qualify as legitimate business expenses.
Incidental expenses: Any reasonable additional expenses you incur while traveling for a business activity can be considered incidental expenses. For instance, if you incur expenses on ground transportation, a rideshare fee, taxi fare, or a subway ticket qualify as business expenses. Laundry and dry cleaning services are also eligible business activities. In addition, indirect expenses like office supplies can be eligible business expenses.
Organization before, during, and after the business trip will help you avoid potential pitfalls or headaches when filing expenses or taxes. From the outset, one great way to separate your business trips and expenses from personal expenses is to have a single credit or debit card that you designate for business use only. This de facto "corporate" card will come in handy and be a best friend on the road since it automatically creates a tally of itemized expenses courtesy of the real-time accounting and monthly statements that come with it.
Beyond the lone card designated for business expenses, your meticulous record-keeping will greatly help you when it's time to account for everything. If you don't want to use a third-party software program or expense-tracking app to track your expenses, a simple solution is to use a basic spreadsheet that tracks the date, the reason for the expense, and the cost. To set this up, once you have incurred an expense, note it down using the aforementioned basic information.
While on the trip, another simple organizational tool is keeping all receipts and other applicable hard-copy records and materials in one designated place. A pouch or envelope will work fine as the place to keep these items. Make sure you read the receipt or record, and if it does not have information such as the name and address of the business, write it on the back before you stash it away. Finally, if a receipt is for something like a business lunch, ensure the date and information about the place of business are on the receipt. Then, write the name of the person you shared your time with and the reason for meeting up somewhere on the receipt.
Claiming travel expense deductions requires proper documentation. This includes retaining receipts and records for all expenses incurred during your business trip. For meals and entertainment expenses, you'll need to note the nature of the meeting, including who you met with, when, and the topics discussed.
It's worth noting that lodging expenses on non-business days may still be eligible for deductions if specific strategies are employed, such as incorporating “vacation days" between workdays. In such cases, the total cost of lodging for the trip can still be tax deductible even when no work is taking place on the weekend. However, meals and entertainment expenses without a clear business justification won't be deductible and must be paid personally.
Allocating expenses between business and personal activities is essential to ensure accurate deduction claims. Expenses must be allocated based on actual usage, so the non-business portion of the expenses may be viewed as taxable income if paid by the individual or company.
To accurately allocate expenses between business and personal activities for tax deductions, follow these steps:
- Track usage for a period of time.
- Determine the allocation by proportionally dividing the expenses based on the amount of business and personal use.
- Maintain proper records to support the allocation.
When combining business and personal travel, careful allocation of expenses and adherence to specific rules is important. Expenses related to the personal nature of the trip cannot be deducted; only those incurred for business purposes can be.
If traveling abroad, you must spend a minimum of 25% of your time conducting business to qualify as a business trip and claim travel expense deductions. If you conduct business for less than 25% of the time while on a trip, you can still deduct travel costs. This deduction must be proportional to the amount of time spent on business.
Rules for international travel
International travel has additional rules to consider when claiming travel expense deductions. As mentioned, you must spend at least 25% of your time abroad conducting business to claim travel-expense deductions.
If you use 25% or less of your trip for business purposes, you can deduct related travel costs in proportion to the time spent on work. This can help to make international business trips more affordable. For example, if 40% of your time is spent on business activities, you can claim the entire cost of airfare as a business expense.
Self-employed individuals should be aware of special considerations when deducting travel expenses, such as home office deductions and computer rental fees. Understanding these unique aspects can help self-employed individuals maximize their tax savings and ensure compliance with tax laws, especially regarding their tax home.
Home office considerations
Home office deductions can be claimed if the office is the primary place of business and is regularly used for business purposes. The IRS has specific guidelines for the regular use of a home office for business purposes, such as the office being used exclusively and regularly for business purposes.
To claim a home office deduction, you can use the simplified method the IRS provides. Here's how it works:
- Multiply the allowable square footage of your home office by the prescribed rate of $5 per square foot.
- The maximum allowable square footage is 300 square feet, so the maximum deduction you can claim using this method is $1,500 annually.
- The simplified option allows for a standard deduction without the need for detailed record-keeping.
Deducting computer rental fees
Computer rental fees can be deducted if the equipment is used for business during the trip. The full cost of the computer rental may be deducted as a business expense.
To claim a deduction for computer rental fees from business travel expenses, you must provide relevant documentation demonstrating the rental fees paid, such as receipts or invoices. Proper record-keeping is essential to support your deduction and ensure compliance with IRS regulations.
Technology, such as expense tracking apps and online bookkeeping services, can simplify record-keeping and documentation for travel expense deductions. These tools can help you track and categorize expenses, making it easier to identify and compute deductible expenses for tax purposes.
Expense tracking applications can:
- Generate reports and summaries of travel expenses
- Be beneficial for tax filing and auditing purposes
- Save time and effort in tracking and documenting your travel expenses
- Ensure accurate deductions and compliance with tax laws
Leveraging technology in expense tracking can be a valuable tool for managing your finances.
Sometimes, you might need more help. This guide provides basic questions about business travel deductions and expenses. Still, you are not alone if you have other questions about what might qualify as a tax-deductible business expense. There are experts at LegalZoom who can answer specific questions and better advise you about both business expenses and business travel-related expenses.
You might have questions about whether specific costs related to your business qualify as ordinary and necessary expenses or wonder if percentages of a certain expense or the entire cost can be completely deductible. Additionally, professionals in the know about things like a specific tax home can help you sort out concerns related to your business so that you can always claim the proper travel expenses. For any consultant looking to get back into the swing of travel, help and practical tips are just a click away.
Understanding and maximizing travel expense deductions can save you significant money on your tax return. By familiarizing yourself with the requirements, maintaining proper documentation, and leveraging the expertise of tax professionals and technology, you can ensure accurate deductions, compliance with tax laws, and, ultimately, keep more money in your pocket.
What kind of travel expenses are tax deductible?
Tax deductible travel expenses include airfare, train/bus fares, taxi rides between an airport or station and a hotel, or from the hotel to a work location.
What are the three requirements for a traveling expense deduction?
To qualify for a traveling expense deduction, you must have a “business trip," leave your tax home, have most of the trip business-related, and plan the trip in advance.
How do I prove travel expenses for taxes?
To prove business travel expenses for taxes, use credit card slips with notes on the business purpose made at the time of incurring the expense.
Are daily travel expenses tax deductible?
Daily travel expenses from your home to a regular place of business are not tax deductible. However, you can deduct transport expenses when traveling between your home and a temporary work location outside the metropolitan area where you live and normally work. Additionally, ordinary and necessary travel expenses incurred while away from your home and your main place of business can be deducted.
How do I allocate expenses between business and personal activities during a combined trip?
Allocate expenses proportionally based on the amount of business and personal use for a period of time, and maintain proper records to support deductions.
by Grace L. Williams
Grace L. Williams is a journalist. Her areas of expertise include small business, career, personal finance, and inve...
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What Travel Expenses Are Deductible for the Self-Employed?
As you grow your business, you'll often have to travel out of town for work purposes. But, we frequently get asked, "What travel expenses are deductible?" The IRS has some strict rules about this so let's go over what you can and can't write off at tax time.
Deductions when you travel out of town for business
If your trip is for business, almost are of your business travel expenses are deductible. Let's separate these into two broad categories: Business expenses at your destination and transportation costs.
Business travel expenses
There are a variety of expenses you incur when you travel for business. These are all deductible. The list below includes the following but isn't limited to:
- Hotels or lodging
- Transportation at destination (taxi, Uber, public transportation)
- Computer rental fees
- Tips you pay on any of the other costs
You're human, so you have to eat and drink. The IRS recognizes this but has also seen people try to abuse the meal deduction in the past. Also, your meals at home aren't deductible. Because of that, you can deduct 50 percent of your meals and beverages on business trips . Often, your meals during business trips can be with other people. It's common to lay the groundwork for a deal or to get a deal over the line while out eating. These food costs can also be deducted at 50 percent. Remember, you must discuss business with one or more business associates either before, during or after this entertainment expense. The days of the three-martini "business" lunch are over. These entertainment expenses must include actual business discussions. These don't have to lead to direct deals, though. It's not just for clients or potential clients, too. You can deduct half the costs of a business meal with suppliers, employees, agents, partners or anyone you're likely to meet for business reasons.
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Business travel and transportation expenses
If you spend more than half your time on business activities while on a trip, you can deduct 100 percent of your transportation costs. That could be the cost of flights or train tickets. Like with other business expenses , you can only deduct travel expenses that are "ordinary and necessary business-related expenses." It also says that extravagant expenses aren't allowed to be deducted. There's a bit of subjectivity in those words. You can deduct the costs of first-class tickets but know this will likely raise red flags with the IRS. Be prepared to justify the business reasons for this type of airfare. One justification could be that this was the only flight you could get to a particular location by a specific time. Of course, don't forget about deducting your mileage when you're out of town for business .
Mixing business with pleasure
If you plan it properly, you may be able to combine some personal fun with your business trip and still receive some tax relief. The key is that business-related actions consume more than half of your time. Example : Jill, a consultant from Phoenix, travels to Chicago for five days to work with a new client. She decides to take the weekend to go sightseeing. She takes in a Cubs game, goes on an architecture tour and catches up with some old friends at Restaurant Row. Because more than half her time is spent on work, she can write off the cost of her flights. She can also deduct the portion of lodging related to work and 50 percent of the costs of the meals related to her consulting job. She cannot deduct the costs of accommodation for the weekend or her personal entertainment.
Business trips out of the country
The above rules apply if you travel within the United State, but there are some slightly different rules for foreign trips. If you travel outside the United States for no more than seven consecutive days, you can deduct 100 percent of your transportation expenses if you spend part of the time on business. It doesn't have to be a majority of the time, just some of your time. You can also deduct the business expenses on those days you do work. The IRS isn‚Äôt trying to subsidize your vacation to the Amalfi Coast, though. Once you hit that week threshold, the requirements for work go up. If you spend more than 75 percent of your time on business at the foreign destination, you can deduct your airfare (or other transportation) and other business-related expenses including lodging. If you spend more than half your time but less than 75 percent of your time on work, you can only deduct the business percentage of your costs. This includes transportation, lodging and others costs you incur. If you spend less than 51 percent of your time on work while on a foreign trip that lasts for more than seven consecutive days, you cannot deduct any of your costs.
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Tax Deductions For Travel Expenses: For Freelancers And Self-Employed
Table of contents
Key takeaways ... Read more
You need to leave your home ... Read more
The trip must be business-related ... Read more
Expenses must be ordinary and necessary ... Read more
What transportation expenses are tax-deductible? ... Read more
Hotels and other lodging expenses ... Read more
Dry cleaning ... Read more
Using a rental car ... Read more
Meals deduction 2023 ... Read more
Luggage fees ... Read more
Wi-Fi and internet access ... Read more
The IRS per diem guidelines 2023 ... Read more
Business calls ... Read more
Shipping costs ... Read more
Nondeductible expenses ... Read more
Traveling abroad ... Read more
Bottom line ... Read more
- One of the main criteria for claiming travel tax deductions is to leave your home and stay the night at a hotel, Airbnb or motel.
- Per diem is a set reimbursable rate for business-related expenses.
- Overseas travel is deductible if it’s for business purposes.
You need to leave your home
The trip must be business-related, expenses must be ordinary and necessary.
What transportation expenses are tax-deductible?
Hotels and other lodging expenses
Dry cleaning, using a rental car, meals deduction 2023.
- The cost should not be extravagant
- The employer, employee or business owner should be the one claiming the deduction
- The business owner or employer provides the food or beverage to a business associate
Wi-fi and internet access.
The IRS per diem guidelines 2023
Business calls, shipping costs, nondeductible expenses.
- A personal vacation
- Lavish and extravagant expenses
- Expenses for your dependents, family members, spouses
- Entertainment (sporting events, concerts, shows, etc.)
Commission And Fees Tax Deduction
Self-employed individuals can claim certain commissions and fees as tax deductions if they are related to their business and are ordinary and necessary.
Contract Labor Tax Deduction
If you do any contract labor, you will have to pay contract labor taxes, also known as SE tax. Estimated payments quarterly need to be made for tax liabilities over $1,000.
Advertising Tax Deduction
Ordinary and necessary promotion expenses and marketing expenses are tax-deductible for self-employed individuals. They should be claimed on Schedule C when filing 1099 tax.
Business Insurance Tax Deduction
Self-employed individuals can deduct business insurance expenses from their 1099 taxes. Sole proprietors and single-member LLCs can claim it on Schedule C.
Meals Tax Deduction
The meals and entertainment deduction in 2023 allows 1099 workers to deduct 50% of business meal costs. Certain meal and entertainment expenses are still fully deductible.
Charitable Contribution Tax Deduction
If you make a charitable donation to an organization, it might count as a tax deduction. Not all charitable donations count as a write-off.
Clothing And Accessories Tax Deduction
Self-employed individuals can take the clothing tax deduction if their clothes cannot be worn outside the work environment.
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More about FlyFin
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Automated Tax Deductions
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The A.I. automatically finds tax deductions every time an expense occurs. It is Simple, Accurate, and Effortless.
Simple: There seems to be quite a lot of confusion with regards to the self employed tax. FlyFin is here to bridge the gap between freelancers and the tax policies set by the IRS.
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FlyFin is powered by A.I. and backed by CPAs to provide you with an accurate tax review. File your 1099 form with the help of FlyFin’s expert CPA team and deduct all your business expenses, such as home office expenses, and you can claim office equipment tax deductions as well.
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The ultimate guide to self-employed tax deductions
Ever wondered why your self-employed friends sing a merry “Yes, please!” when asked if they want the receipt? Or have your friends ever looked at you funny for wanting copies of your receipts? The answer—unless someone is just a huge fan of keeping hoarding receipts—you’re self-employed and want the sweet benefits of self-employed tax deductions. This article will bring you all in the loop, giving you everything you need to know about tax deductions for the self-employed, plus common examples of what you can deduct (hello, it’s your phone bill calling) and how to maximize self-employed tax deductions. All of this info is critical for you if you’re working freelance, have a small business, or work in any other self-employed capacity. And sure—while self-employed tax deductions do mean being organized and keeping track of your receipts , it also means a lower tax bill during tax season. And we think that’s worth keeping track of those business dinners, don’t you?
What are self-employed tax deductions?
Before we begin, let’s review the basics: What are self-employed tax deductions? Self-employed business tax deductions are eligible expenses that you can deduct on your return. This lowers the amount of income that gets taxes, helping you save money. In other words, self-employed business deductions are your new best friends during tax time . They’re the friends that you brought along to your (dreaded) prom. You know, the ones who made it much more bearable. But in this scenario, it’s not prom: it’s tax time. And your self-employed tax deductions aren’t there as dance partners, but sort of as financial ones. They come in to help lower your tax bill, essentially saving you from a night of crying in the bathroom. (Coincidentally, that works for prom and tax time.) Now, when it comes to tax deductions, you’ve got two to choose one. First, there’s the standard deduction, like the flat tax rate if you’re single or married and filing jointly. Then you’ve got itemized deductions. This is where you could save the big bucks, but it does involve tracking and organizing your expenses . But how do you know what to track? What’s considered a write-off? That’s where this ultimate guide we’ve put together for you comes in.
Common self-employed tax deductions
On to the good stuff: your most common self-employed tax deductions. These are the items your business spends money on throughout the year that are considered eligible expenses.
Home office expenses
Ah, your cozy home office. Whether you work from home full-time or just use your digs part-time, parts of your home office are considered eligible for self-employed tax deductions. But what about the cactus growing in it? Or the fuzzy rug you bought to keep your feet comfy and your chair from rolling? Not so fast. You can’t deduct everything, but there are a few expenses you can claim, including:
- a portion of rent or mortgage
- property taxes
- the cost of utilities
- any repairs or maintenance
- any similar expenses
Here’s how it works: You can deduct your home office expenses in a couple ways: by percentage or a simplified approach. Let’s start with percentage. First, determine the percentage of square footage you use in your home for business-related activities. That amount is what will be deductible. For example, if you use 15% of your home “exclusively and regularly” for business-related activities, 15% of your housing expenses for that year may be deductible. You can also use a simplified approach. Instead of calculating your deduction by percentage, you can deduct $5 per square foot of the space, up to 300 square feet. This means less record keeping, but potentially a lower deduction.
Have medical insurance for you or your family? Your premiums might be deductible. Medical and/or dental insurance premiums for you, your spouse, your family (dependents and children under the age of 27 by the end of tax year) are deductible, plus long-term care insurance premiums—but these come with rules. More on those here . Here’s how it works: This acts as an adjustment to your income vs. an itemized deduction. This means you don’t have to itemize it in order to claim it as a deductible. But fair warning: if you have a spouse who has an employer plan, you can’t take the deduction—even if you chose not to enroll. Other tips include finding out if you can deduct premiums as a medical expense. This is usually the case if you’ve paid for your premiums yourself. Plus, what you’re deducting will be limited to costs that exceed 7.5% of your adjusted gross income . This is your gross income minus adjustments to income.
Attending a college or university? Taking a few night courses on Growing a Business 101? You’re in luck (and pretty darn smart). You can deduct things called “qualifying work-related education.” This means tuition, supplies, fees, transportation to class, and any other related expenses. Here’s how it works: You can only deduct your expenses if the education you’re pursuing “maintains or improves skills needed in your present work.” So, if you’re taking a course in woodworking but your business is rooted in freelance graphic design , this deductible isn’t for you. Another example: if you have your own electrical business but are taking courses to meet the minimum educational requirements, your costs cannot be deducted. You can learn all about the rules and regulations here .
Fact: travel adds up. Whether that’s to drop off fluffy pastries to a hungry customer or to pick up a check from a client, gas and the wear-and-tear on your vehicle is an expense—one that can be deductible. In fact, you can deduct just over $1 for every two miles you travel with your vehicle for business matters. (And yes, driving back to the bakery because you suddenly remembered that a baker’s dozen is 13, not 12, counts.) Here’s how it works: When it’s time to tally up your taxes, add the number of miles you drove for business and multiply that by the IRS' standard mileage rate (which is 65.5 cents per mile in 2023), then deduct the total. Pro tip? Log your mileage. You never know when you’ll get audited. An alternative? Consider deducting your “actual car expenses” instead. This includes depreciation, gas, oil changes, licenses and fees, road tolls, parking fees, rent for your parking space, insurance costs, lease payments , registration fees, repairs, and tires. It’s a lot, but it could save you some serious dough. P.S. if you’ve got five or more cars in your business, you’ll have to track your car expenses anyway!
Age ain’t nothin’ but a number. Except when you’re saving for it…and that means you’ll want all the extra savings you can get—like tax deductions. And in 2023, you can deduct contributions to either a solo or one-participant 401(k) plan of up to $66,000 in 2023. Are you 55 or older? Add an extra $7,500 to that number, or 100% of your earned income—whichever figure ends up being less. Here’s how it works: Simply put, it’s kind of like your typical employer-sponsored 401(k). Let’s break it down further.
- Traditional solo 401(k): Contributions are pre tax
- Over the age of 59.5: Distributions are taxed.
- Contributions: You can contribute in two ways: both as an employee of yourself and as the employer. In 2023, that’s with salary deferrals of up to $22,500, in addition to a $7,500 catch-up contribution if you’re over 50.
- Additions: You can add about 25% of your net self-employment income, so long as it doesn’t exceed $66,000 (as of 2023)
At 15.3% of net earnings, this is one of the most common self-employment tax deductions. This is a cumulation of the 12.4% Social Security tax plus a 2.9% Medicare tax on net earnings. But remember: this self-employment tax is different from income tax. Here’s how it works: You’re able to deduct half of your self-employment tax on your income taxes. So, if your Schedule SE reports that you owe $1,000 in self-employment tax, you’ll have to pay that money when it’s due, but when it’s tax time, you’ll be able to deduct that money on your Form 1040 .
Business insurance premium
Business insurance is great for lowering the stress that comes with those “what if’s,” but you know what else it can do? Lower your tax bill. You’re able to deduct your business insurance premiums, plus employee accident, and employee health insurance. Here’s how it works: There’s a section in Schedule C for deducting your insurance premiums. For more details on what to deduct, check out the insurance section of this form.
Paper, printers, ink (so much ink), and all of those everyday items you use to keep your business up-and-running are deductible at tax time. Here’s how it works: Have you been using your office supplies in the tax year? Deduct them. But if you have some items that have been sitting around, those are only deductible in the year you bought them. For more expensive items, like computers, laptops, or special equipment, it’s come to deduct them in the year you bought them if their “useful lives” are a year or less. If it’s longer, they might be considered an asset by the IRS, and therefore, be seen as something that depreciates. So, while you can’t deduct the full cost, you can probably still deduct its depreciation over its life.
Credit card and loan interest
Does saving money at tax time interest you? Well then, your credit card statements might have some self-employment tax deductions, like the interest accrued on any purchases that were considered to be business expenses. Here’s how it works: You can deduct credit card interest accrued from business expenses, but only if you bought the item on your card, not someone else’s. Don’t have a business credit card? Your personal credit card counts too, as long it's exclusively for business expenses.
Phone and internet costs
Use a phone or the internet? Of course you do. You’re a modern-day business owner! And that means you get to deduct part or all of your annual costs for your phone or internet bills. “All” is for those who have a dedicated business line, cell phone, or internet connection. Here’s how it works: The rules are simple—you have to use your phone or internet for business, and if you have an employer, you have to make sure they’re not already reimbursing you.
Business travel and meals
Flights and food (and not just when paired together) are part of what you can deduct at tax time—even if your travels are just to a neighboring city. Your self-employment tax deductions include flight costs, accommodations, taxis and transportation, plus the food you eat while on business-traveling or while you woo some wonderful clients—so long as they're for actual business purposes. Here’s how it works: You can only deduct travel costs for you and your employees. In 2023, that amount was 50% of the cost of a business-related meal and was not categorized as "lavish or extravagant.” Other rules: you or your employee(s) were present at the meal, a business contact got the meal, and the total cost didn’t include entertainment. But keeping track of all those receipts can get messy—especially if they're stuffed in a shoebox. (Psst: they don’t have to be!) One alternative is issuing a standard daily meal allowance. If you go this route, you’ll deduct a flat amount, which is set by the U.S. General Service Administration .
Pro tip? Keep your receipts either way. You never know when you’ll get audited.
Start up costs
Going into business? You might be able to deduct some of the costs. This includes salaries and wages for your staff-in-training, consulting, advertising, and more. Here’s how it works: If you’re starting your business, you are eligible to deduct up to $5,000 of the costs and $5,000 of organizational costs—essentially, costs associated with setting up a legal entity for your business, if applicable. For this dedication, it’s important to note that your start-up and organizational costs are usually treated as “capital expenditures,'' like assets versus expenses. This means the depreciation of assets that happen overtime can be a deductible business expense. For more on that, check out IRS Publication 535.
They say it costs money to make money, and when that cost is advertising that’s directly related to your business, it can be deducted. Here’s how it works: To claim your deduction, you’ll use line Schedule C. In most cases, you can deduct advertising "to keep your name before the public if it relates to business you reasonably expect to gain in the future.” This includes “goodwill” advertising, like getting people to make a donation to the Red Cross, but it doesn’t include lobbying expenses. Other no-gos include political ads, like putting your logo in the brochure of a political party.
Do you belong to a club or organization? Generally speaking, if it supports your business, you might be able to deduct the fees. Here’s how it works: Fees associated with professional organizations (boards of trade, chambers of commerce, real estate boards, medical associations, and the like) or charitable donations may be able to be deducted. That said, if your membership is one to provide entertainment for you or your clients, it’s not considered a deductible.
Qualified Business Income Deduction
We’re all for new things here at Wave, and when it comes to self-employment tax deductions, one of our recent faves is the QBI: Qualified Business Income Deduction. It gives self-employed and small-business owners the opportunity to deduct a portion of their business income during tax time. Here’s how it works: The QBI is for those who have what’s called “pass-through income”, i.e. business income that’s reported on your personal tax return. Entities eligible include sole proprietorships, partnerships, S corporations, and limited liability companies (LLCs). To see if you’re eligible, determine your total taxable income, which is all income (business and other). In 2023, if it’s at or below $182,100 for single filers or $364,200 for joint filers, you could qualify for the 20% deduction.
Who can claim self-employed tax deductions?
Work for yourself? That means you’re self-employed and are eligible for these tax deductions—even if you're not self-employed full-time. By definition, the IRS states self-employment as “operating a trade or business as a sole proprietor , independent contractor, single-member LLC, or as a member of a partnership.” So, even if you’re not generating profits yet, as long as you’re working toward that, you’re self-employed.
How to claim self-employed tax deductions
Ready to start claiming? First, you’ll need to complete the Schedule C, Profit and Loss from the business form found in Part II of the form. If any of your deductions aren’t listed in this section, you can add your own list in the business expenses section in Part V or Schedule C. And remember: when you’re claiming your self-employed tax deductions, it’s all about the ordinary. Keep the IRS’s definition of a tax deduction in mind, and don’t claim anything that wouldn’t be classified as a necessary and ordinary expense.
How to maximize self-employed tax deductions
Maximizing your self-employment tax deductions comes down to a few things: organization, tracking, and accurate documentation. As you go through your daily business activities, make sure you’re keeping track of what you’re spending money on: work-related meals, travel, office supplies, advertising… the list goes on. By practicing good record keeping throughout the year, tax time doesn’t seem too daunting—especially when you’ve got a thick stack of expenses to claim.
Self-employed tax deductions vs. payroll tax deductions
Tax deductions come in handy for both self-employed folks and those who own businesses with employees. The main differences are the type of taxes. Payroll tax deductions are wages that are withheld from an employee’s total earnings. If you’re working for someone else, it’s likely that the employer will withhold these to pay taxes, benefits, and things like health insurance or 401(k) contributions. If you’re employing staff, you’ll likely do the same. Self-employed tax deductions are a bit different. It’s what you claim at tax time to lower your final tax bill.
Is FICA a self-employment tax?
Short answer: yes. FICA (the Federal Contributions Insurance Act) is both a federal payroll tax and part of the self-employed tax that covers Social Security and Medicare. When you’re under payroll, it’s typically deducted by your employer from every paycheck, but if you’re self-employed, you’ve got to do the math on your own. Currently, this deduction is 15.3%. It’s the total of 12.4 % for Social Security plus 2.9% for Medicare.
Get started claiming self-employment tax deductions now
Claiming your self-employment tax deductions is kinda a big deal. There’s lots to do throughout the year to stay organized— remember: keep those receipts! —and plenty of ways to go about claiming the various types of deductibles we’ve mentioned in this list. But trust us: even though there’s a lot to consider, it’s for your own good. Afterall, self-employment tax deductions are a way to save you and your business money. And when you need advice as you make your way through Schedule Cs, IRS publications, and expenses that might not actually count (like that extra glass of bubbly you bought to celebrate your first 5-star review that wasn’t your mom’s), know that you’re not alone. Wave Advisors are standing by to help you figure out what’s a go and what’s a no, making tax time feel just as good as any other day of the year. Even those 5-star ones. 🤩
The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.
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What are Travel Expenses?
Understanding travel expenses, types of travel expenses, the bottom line.
- Deductions & Credits
- Tax Deductions
Travel Expenses Definition and Tax Deductible Categories
Michelle P. Scott is a New York attorney with extensive experience in tax, corporate, financial, and nonprofit law, and public policy. As General Counsel, private practitioner, and Congressional counsel, she has advised financial institutions, businesses, charities, individuals, and public officials, and written and lectured extensively.
For tax purposes, travel expenses are costs associated with traveling for the purpose of conducting business-related activities. Reasonable travel expenses can generally be deducted from taxable income by a business when its employees incur costs while traveling away from home specifically for business purposes. Those business purposes can include conferences or meetings.
Individual wage earners can no longer deduct unreimbursed business expenses. That deduction was one of many eliminated by the Tax Cuts and Jobs Act of 2017.
While many travel expenses can be deducted by businesses, those that are deemed unreasonable, lavish, or extravagant, or expenditures for personal purposes, may be excluded.
The Internal Revenue Service (IRS) considers employees to be traveling away from home if their business obligations require them to be away from their "tax home" (the area where their main place of business is located) for substantially longer than an ordinary workday, and they need to get sleep or rest to meet the demands of their work while away.
- Travel expenses are tax deductible only if incurred for the purpose of conducting business-related activities.
- Only ordinary and necessary travel expenses are deductible. Expenses that are deemed unreasonable, lavish, or extravagant are not deductible
- The IRS considers employees to be traveling away from home if their business obligations require them to be away from their "tax home” substantially longer than an ordinary day's work.
- Examples of deductible travel expenses include airfare and lodging, transport services, cost of meals and tips, and the use of communications devices.
- Travel expenses incurred while on an indefinite work assignment that lasts more than one year are not deductible for tax purposes.
Well-organized records—such as receipts, canceled checks, and other documents that support a deduction—can help individuals get reimbursed by their employer and help their employers prepare tax returns. Examples of travel expenses can include:
- Airfare and lodging for the express purpose of conducting business away from home
- Transport services such as taxis, buses, or trains to the airport or to and around the travel destination
- The cost of meals and tips, dry cleaning service for clothes, and the cost of business calls during business travel away from home
- The cost of computer rental and other communications devices while on the business trip
Travel expenses do not include regular commuting fees.
The use of one’s personal vehicle in conjunction with a business trip, including actual mileage, tolls, and parking fees, can be included as a travel expense. The cost of using rental vehicles can also be counted as a travel expenset, hough only for the business-use portion of the trip. For instance, if in the course of a business trip, a traveler visited a family member or acquaintance, the cost of driving from the hotel to visit them would not qualify for travel expense deductions.
Travel expenses incurred while on an indefinite work assignment which lasts more than one year are not deductible for tax purposes.
The IRS allows other types of ordinary and necessary expenses to be treated as related to business travel for deduction purposes. Such expenses can include transport to and from a business meal, the hiring of a public stenographer, payment for computer rental fees related to the trip, and the shipment of luggage and display materials used for business presentations.
Travel expenses can also include operating and maintaining a house trailer as part of the business trip.
Can I Deduct My Business Travel Expenses?
Business travel expenses can no longer be deducted by individuals.
If you are self-employed or operate your own business, you can deduct those "ordinary and necessary" business expenses from your return.
If you work for a company and are reimbursed for the costs of your business travel, your employer will deduct those costs at tax-time.
Do I Need Receipts for Travel Expenses?
Yes. Whether you're an employee claiming reimbursement from an employer or a business owner claiming a tax deduction, you need to prepare to prove your expenditures. Keep a running log of your expenses and file away the receipts as backup.
What Are Reasonable Travel Expenses?
Reasonable travel expenses, from the viewpoint of an employer or the IRS, would include transportation to and from the business destination, accommodation costs, and meal costs. Certainly, business supplies and equipment necessary to do the job away from home are reasonable. Taxis or Ubers taken during the business trip are reasonable.
Unreasonable is a judgment call. The boss or the IRS might well frown upon a bill for a hotel suite instead of a room, or a sports car rental instead of a sedan.
Individual taxpayers need no longer fret over recordkeeping for unreimbursed travel expenses. They're no longer tax deductible by individuals, at least until 2025 when the provisions in the latest tax reform package are due to expire or be extended.
If you are self-employed or own your own business, you should keep records of your business travel expenses so that you can deduct them properly.
Internal Revenue Service. " Topic No. 511: Business Travel Expenses ."
Internal Revenue Service. " Publication 463: Travel, Gift, and Car Expenses ," Pages 4-5.
Internal Revenue Service. " Publication 463: Travel, Gift, and Car Expenses ," Pages 6-7.
Internal Revenue Service. " Topic No. 511 Business Travel Expenses ."
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I have a question about self-employed tax deductions. What self-employed vehicle expenses am I eligible to deduct?
To deduct vehicle expenses, you can use standard mileage or actual expenses. For either method, keep a log of the miles you drive for your business. Both methods allow self-employed tax deductions for tolls and parking fees.
If you use the standard mileage rate, you can only deduct the mileage at a standard rate. For 2022, the rate is $0.63. You cannot deduct self-employed vehicle expenses, including:
- Actual vehicle expenses
- Lease payments
- Vehicle registration fees
If you use actual vehicle expenses, you can’t deduct mileage. Instead, you can deduct:
- Registration fees
- Garage rental
If you use your car for both business and personal use, you must prorate your expenses. To learn more about self-employed vehicle expenses, see Publication 463: Travel, Entertainment, Gift, and Car Expenses at www.irs.gov.
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- Business and self-employed
- Business tax
Expenses if you're self-employed
Car, van and travel expenses.
You can claim allowable business expenses for:
- vehicle insurance
- repairs and servicing
- hire charges
- vehicle licence fees
- breakdown cover
- train, bus, air and taxi fares
- hotel rooms
- meals on overnight business trips
You cannot claim for:
- non-business driving or travel costs
- travel between home and work
You may be able to calculate your car, van or motorcycle expenses using a flat rate (known as simplified expenses) for mileage instead of the actual costs of buying and running your vehicle.
If you use traditional accounting and buy a vehicle for your business, you can claim this as a capital allowance .
If you use cash basis accounting and buy a car for your business, claim this as a capital allowance as long as you’re not using simplified expenses .
For all other types of vehicle, claim them as allowable expenses.
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Home > Tax > Self Employment Expenses > How to Claim Business Travel When You’re Self-Employed
How to Claim Business Travel When You’re Self-Employed
Claiming for business travel as an expense on your tax return is a handy way to reduce your tax bill. However, the HMRC rules surrounding what you can and can’t claim are very strict. That’s because they want to keep things fair across everyone in the self-employed community.
In this guide, you’ll find out what travel expenses you can claim on your tax return along with examples to help you understand how the rules work.
Table of contents
1.1 what is a normal business commute, 2.1 what is an irregular journey, 2.2 dual purpose trips, 2.3 travel to a permanent place of work, 3. claiming for overseas business travel, 4. claiming for overnight stays, 5. how to claim for business travel in your own vehicle, 6. keeping a record of your self-employed travel expenses, 7. how to claim travel expenses on your tax return, 1. what counts as business travel when you’re self-employed.
You can claim for business travel outside of your normal business commute against your taxes, also known as irregular travel. That includes times like when you see a client, supplier & other one-off trips.
A normal business commute means your usual travel between your home and your base of work. If you’re mainly based at home, then your home office will be your base of work so you’ll have no business commute. However, if you rent an office then that location will become your base of work. This means you cannot claim business travel between your home and work on your tax return .
For those that store tools or equipment at a location away from their home and travel to collect equipment on the way to work, then any travel between home and collecting tools is not a tax deductible expense.
2. How to Claim Business Travel When You’re Self-Employed
You can claim for business travel outside of your normal commute if you are self-employed. However, it’s only on the premise that it meets with HMRC guidelines.
For your business travel to be an allowable expense , each journey you undertake must be:
- An irregular journey, outside of your normal commute;
- Fully business related and not contain any element of personal travel (also known as a dual purpose trip );
- Not related to a regular contract/arrangement with a client.
In general, irregular business travel for the self-employed, means travel outside of your normal commute and is tax allowable. That’s times like when you travel to a one-off client meeting, sales meeting or to meet a supplier.
A self-employed bookkeeper travels from their office to meet with a potential new client at their premises. The cost of doing so would be tax deductible.
A dual-purpose trip is one that has a personal element to it. For example, where you sight-see as part of your work trip, take your family along or even just stop to buy a pint of milk on the way home! Consequently, your entire trip could be rendered a disallowable expense .
Travel to a permanent place of work is not a tax allowable expense and this could include travel to work at a clients workplace on an ongoing basis. Travel to a temporary workplace would be tax allowable.
You could keep entirely separate receipts and expenses for the business side of your trip and book your family’s ticket separate from your own. That way if the HMRC does investigate your expense claim they wouldn’t be able to see that you took your family with you.
If your business travel includes an overnight stay, then you can claim the cost of this as part of your travel. You can do this along with food and drink you have had to pay for as part of your irregular journey. You can claim for the following:
- The cost of your travel to the location;
- Accommodation for your overnight stay;
- A reasonable amount for an evening meal and breakfast;
Just like with business travel, the rules for what you can and can’t claim on your tax return when it comes to food are quite strict. Read this guide to claiming for food when you’re self-employed to help you decide what is an allowable business expense.
Whilst the amounts you spend on taxis, train fares and flights are easy to identify, if you use your own car for business purposes you’ll need to decide which is the most tax efficient way to claim for using your car for work reasons. This will most likely depend on how much business travel you do.
The main ways you can claim for using your car for reasons is to:
- Claim for business mileage at the set rate by HMRC;
- Buy a car through your business as a sole trader , with for cash or a lease;
Just like any other business expenses, you need to keep receipts and invoices to support any business travel you are claiming on your tax return. For things like hotels, Uber and flights this is straight-forward because you’ll probably be emailed any receipts for the things you buy.
If you are claiming for business mileage, then you’ll need to keep a record of the miles you have travelled, you also need the date and reason. You can find out how to download a business mileage expense claim form here.
You need to claim the cost of tax-deductible business travel in the self-employment section of your tax return. If your business turnover is less than £85,000 for 2021/2022, you’ll have the option to fill in the simplified version of this part of the tax return. Therefore, you only need to enter your total expenses. You need to include your business travel claim in the figure you enter alongside your other allowable business expenses.
If your business turnover is more than £85,000, you need to enter a breakdown of your expenses in the boxes set out by HMRC . Here, you should include your business travel in car, van and travel expenses.
Whatever your business turnover , you should keep a note of what you are claiming for and how you worked it out as part of your business records . This is in case of an HMRC investigation and they ask for evidence of what you are claiming for to check you’ve paid the right amount of self-employed tax .
When it comes to claiming expenses, always use your judgement when it comes to deciding what you deduct against your taxes. Incorrect claims can result in penalties . And, as always, if you aren’t sure, seeks the advice of a professional.
- Can I Buy a Car Through my Business as a Sole Trader?
- Are Training Costs Tax Deductible?
About Anita Forrest
Anita Forrest is a Chartered Accountant, spreadsheet geek and money nerd helping financial DIY-ers organise their money so they can hit their goals quicker.
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IRS Tax Tip 2023-76, June 6, 2023
Many people travel for their job — some for an occasional conference and some travel year-round. Whatever their time on the road, business travelers should know how and when to deduct business travel expenses .
What to know about tax deductions for business travel
Business travel deductions are available for certain people who travel away from their home or main place of work for business reasons. A taxpayer is traveling away from home if they are away for longer than an ordinary day's work and they need to sleep in a location other than their home to meet the demands of their work while away.
Travel expenses must be ordinary and necessary. They can't be lavish, extravagant or for personal purposes.
Employers can deduct travel expenses paid or incurred during a temporary work assignment if the assignment is less than one year.
Travel expenses for conventions are deductible if attending them benefits the business. There are special rules for conventions held outside of North America.
Deductible travel expenses include:
- Travel by plane, train, bus or car between home and a business destination
- Fares for taxis or other types of transportation between an airport or train station and a hotel, or from a hotel to a work location
- Shipping of baggage and sample or display material between regular and temporary work locations
- Using a personally owned car for business
- Lodging and meals
- Dry cleaning and laundry
- Business calls and communication
- Tips paid for services related to any of these expenses
- Other similar ordinary and necessary expenses related to the business travel
Taxpayers can find more about the rules for travel deductions with Publication 463, Travel, Gift, and Car Expenses.
Self-employed individuals or farmers with travel deductions
- Self-employed people can deduct travel expenses on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship) .
- Farmers can deduct travel expenses on Schedule F (Form 1040), Profit or Loss From Farming .
Travel deductions for Armed Forces reservists
Members of a reserve component of the Armed Forces of the United States can claim a deduction for unreimbursed travel expenses paid during the performance of their duty. These travel expenses must be for travel more than 100 miles away from their home.
Recordkeeping is important
It's easier to prepare a tax return with organized records . Taxpayers should keep records such as receipts, canceled checks and other documents that support a deduction.
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